House bill strengthens employer-based pensions

WASHINGTON — The House on Thursday passed legislation that lawmakers hope will restore health to the financially ailing employer-based pension system that millions of Americans depend on for retirement security.

While there was wide agreement that the current system is in deep trouble as more companies abandon or freeze their plans, the 294-132 vote reflected the differences in opinions on how to fix it.

The Republican-backed bill would require companies to meet their obligations to retirees while boosting the financial future of the federal agency that takes over abandoned plans.

“Without reform the system may very well collapse under mounting deficits,” said Rep. Tom Price, R-Ga., in urging support for the GOP bill.

Democrats argued that the bill would lead to more companies freezing or dumping their plans, depriving workers of promised benefits. “We’ve made the problem worse,” said Rep. George Miller, D-Calif. “We make it easier for corporations to simply get rid of these pension benefits without negotiations.”

The bill would set guideposts for companies that don’t have enough money in their pension funds to catch up. Defined-benefit plans, which give retirees a fixed amount based on salary and years of service, are now underfunded by up to $450 billion, putting in question whether promised benefits will be available when workers reach retirement.

The Senate passed its version of pension reform last month, and House action would be a step toward what could be the most important retirement security legislation of President Bush’s second term in office. Prospects currently appear dim for movement on the top retirement priority for the White House, overhauling the Social Security system.

House-Senate negotiations on a compromise bill probably won’t take place until Congress reconvenes next year. A House vote this year became a reality only after Republican leaders on Tuesday announced that the United Auto Workers, after winning several concessions, was now actively supporting the legislation.

The backing of unions desirous of protecting retirement benefits for their workers is crucial to winning needed Democratic votes. A majority of Democrats are still expected to oppose the bill.